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Hydrogen investors like patents, IEA says

More than half of the USD 10bn of venture capital investment into hydrogen firms in 2011-2020 went to start-ups with patents, according to an IEA study.

More than half of the USD 10bn of venture capital investment into hydrogen firms in 2011-2020 went to start-ups with patents, according to a joint study of patents by the European Patent Office (EPO) and the International Energy Agency (IEA).

Start-ups with patents represented less than a third of companies in the report’s data set, according to a news release summarizing the findings.

The study found that holding a patent is also a good indicator of whether a start-up will keep attracting finance, noting that “more than 80% of late-stage investment in hydrogen start-ups in 2011-2020 went to companies that had already filed a patent application in areas such as electrolysis, fuel cells, or low-emissions methods for producing hydrogen from gas.”

The percentage increases to 95% when funding acquired in the IPO/post-IPO stage is taken into consideration.

Overall, the report found that hydrogen technology development is shifting towards low-emissions solutions such as electrolysis. Global patenting in hydrogen is led by the European Union and Japan, which account for 28% and 24% respectively of all IPFs filed in this period, with significant growth in the past decade. The leading countries in Europe are Germany (11% of the global total), France (6%), and the Netherlands (3%).

The United States, with 20% of all hydrogen-related patents, is the only major innovation center where international hydrogen patent applications declined in the past decade. International patenting activity in hydrogen technologies remained modest in South Korea and China but is on the rise. In addition to these five main innovation centers, other countries generating significant volumes of hydrogen patents include the United Kingdom, Switzerland and Canada.

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8 Rivers opening tech portfolio to Chart Industries

Chart Industries has executed a memorandum of understanding with 8 Rivers Capital evaluate the latter’s portfolio of technologies, according to a news release.

The collaboration includes developing equipment for 8 Rivers’ technologies backed up by Chart’s design and manufacturing capabilities.

”The companies will work together to identify and develop commercial opportunities to integrate Chart offerings into 8 Rivers projects,” the release states.

In March The Hydrogen Source reported that North Carolina-based 8 Rivers was scouting for a location in the US Gulf Coast for its first clean hydrogen production facility and would need to raise capital.

The firm has developed new technologies such as 8RH2, a process to generate hydrogen with full carbon capture, and the Allam-Fetvedt Cycle, a process which helps to generate power from carbon-based fuels without air emissions.

Chart would become one of the suppliers of choice for various liquefaction, refrigeration processes, or liquefaction and refrigeration equipment technologies, cold boxes, heat exchangers, compressors, fans, liquid hydrogen storage tanks and trailers, and other associated equipment needed to implement 8 Rivers’ technologies.

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Hydrogen tech firm looking for distribution partners with eye on Series B

A Florida-based hydrogen technology company is hoping to find strategic partners with distribution networks as part of its impending Series A capital raise, with an eye on a much larger Series B later.

BoMax Hydrogen, the Florida-based hydrogen production technology firm, is searching for strategic partners with distribution networks as part of its soon-to-launch Series A capital raise, CEO Chris Simuro said in an interview.

BoMax, founded in 2014 and headquartered in Orlando, will launch a $15m Series A on November 1, Simuro said. The company has hired Taylor DeJongh to run the process, as recently reported by ReSource.

Greenberg Traurig is the company’s law firm, Simuro said. They use a regional accountant in Florida.

Taylor DeJongh is looking for three to five investors to put in between $3m and $5m each. BoMax is in discussions with French container shipping company CMA-CGM as a potential investor, he said.

“We are truly searching for distribution partners,” Simuro said, adding that company doesn’t envision itself touching the end-use customer.

The Series A funds should provide up to 24 months of runway and expand the company’s manufacturing capacity, Simuro said. A follow-on Series B capital raise will likely be $100m or more.

BoMax has raised some $5m to date, including from state government aerospace economic development agency Space Florida.

Funds from the Series A will be used to make a beta prototype, scale operations at the company’s labs in Orlando and prepare for commercial production.

No electrolysis

The company touts a novel technology making hydrogen from visible light without the need for solar electrolysis, according to a pre-teaser marketing document seen by ReSource. An alpha prototype has been awarded by the US Department of Energy.

Requiring a larger footprint, electrolysis can ultimately produce 38 liters of hydrogen per hour per square meter, Simuro said. BoMax believes it can reach 50 liters per hour in six months time.

“It replicates how hydrogen is made in the natural world,” Simuro said. “In order to do this globally, we are going to need partners.”

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Mining giant Anglo American invests $200m in merger with Seattle-based First Mode

The newly combined business, valued at $1.5bn, will pursue zero-emission haulage solutions for mining and other heavy industries. First Mode is working on providing critical mine site infrastructure for hydrogen production, battery recharging, and hydrogen refueling.

First Mode, a global carbon reduction company focused on heavy industry, and global mining company Anglo American have signed a binding agreement to combine First Mode and Anglo American’s nuGen™ zero emission haulage solution to accelerate the transition of mining and other heavy industries to diesel-free futures, according to a news release.

The transaction, which is expected to close in January 2023, values the newly combined business in the order of $1.5bn and includes a $200m equity injection from Anglo American.

Upon closing of the transaction, First Mode will enter into a global supply agreement to supply several nuGen™ systems to Anglo American which includes the retrofit of approximately 400 ultra-class haul trucks with First Mode’s proprietary hybrid fuel cell battery powerplant and related infrastructure. The supply agreement includes the appropriate provision of critical supporting infrastructure such as refueling, recharging, and facilitation of hydrogen production. The roll-out of nuGen™ across Anglo American’s haul truck fleet over the next 15 years is subject to certain conditions and required approvals.

Previously announced in June 2022, the transaction is a unique combination of creative engineering excellence and mining expertise which brings together the existing First Mode business with Anglo American’s nuGen™ related intellectual property, management, and operational teams. First Mode is now uniquely positioned to commercialize the nuGen™ haulage solution which intelligently incorporates new technology into mine site operations and consists of a powerplant with appropriate hybridization of hydrogen powered fuel cells and battery (depending on customer and site requirements), refueling and recharging technology, clean energy production and storage, modification of diesel electric vehicles, digital integration with mine site systems as well as ongoing services.

The investment will facilitate the rapid global growth of First Mode, development of production facilities in Seattle and new proving grounds in Centralia, Washington, support staffing goals worldwide, develop our footprint in Perth, Australia, and speed the commercialization and deployment of First Mode clean energy solutions to market.

On close, Anglo American will become a majority shareholder of First Mode, with the balance continuing to be held by First Mode employees. In addition, current First Mode President and CEO, Chris Voorhees will transition to the role of Chief Product & Technology Officer, overseeing the company’s global product and technology development out of Seattle. Julian Soles, Anglo American’s head of Technology Development, will take over as First Mode CEO and be based in First Mode’s new headquarters in London.

“First Mode was founded in 2018 with the goal of building the barely possible. We have done just that and our mission is now to rapidly decarbonize heavy industry by dramatically reducing our customers’ greenhouse gas emissions. I can’t imagine a team better suited to this urgent challenge,” said Chris Voorhees.

“The First Mode mission is much bigger than a single haul truck,” said Julian Soles. “Mining is how the world obtains the materials needed for the clean energy transition, and it is where the carbon footprint starts. This is where the First Mode solution begins; starting at the source, in mining, to replace diesel and accelerate the clean energy transition.”

The world’s first proof-of-concept including renewable energy generation, hydrogen production and refueling, and an ultra-class haul truck, launched in May 2022, continues to be operated at Anglo American’s Mogalakwena platinum group metals mine site in South Africa. This month the truck reached a significant milestone when it completed initial commissioning and was introduced into the mine’s commercial fleet operations, including pit and crusher activities.

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TC Energy executive talks hydrogen strategy

Canadian midstream giant TC Energy recently unveiled it was pursuing 10 hydrogen projects across North America. To learn more we caught up with Omar Khayum, a vice president at the company in charge of hydrogen project development.

TC Energy is evaluating 10 blue and green hydrogen hubs across North America, viewing incumbency as a significant competitive advantage.

The company is looking to use hydrogen as a means of providing a larger basket of low-carbon solutions to customers, according to Omar Khayum, a TC Energy vice president who is in charge of hydrogen project development. That basket includes mature power generation assets like wind, solar and pumped hydro, Khayum said in an interview, as well as additional firming resources, renewable natural gas, and carbon capture.

“We have a continental platform of customers that are in oil & gas and heavy industry that are looking to decarbonize their existing feedstock,” he said.

TC Energy is partnering with end-use customers, adding capabilities into the partnerships, and sharing in both the risk and benefit of the projects, he said.

“Our incumbency really allows us to partner with end users, and identify customer solutions,” Khayum said. “That’s our business model around de-risking what is a newer form of energy solution.”

Khayum declined to specify where the 10 hydrogen projects are located, other than to say they are proximate to industrial load – existing steelmaking, power plants, chemical facilities and refineries – and are not on the Gulf Coast. TC Energy has announced one project in Alberta which involves an evaluation of its Crossfield gas storage facility and would entail generating 60 tonnes of hydrogen per day with capacity potentially increasing to up to 150 tonnes per day.

In some cases, TC Energy is partnering with the end-use customer to jointly develop the hydrogen projects, Khayum said. “We are the lead developer in most cases but we’re not managing all of the risk ourselves – we’re putting together coalitions with organizations that have upstream and downstream capabilities to make sure we de-risk effectively.”

While conducting project management, TC will use external EPC firms and OEMs to deliver projects, depending on the location and technology in use, Khayum said.

Project funding

As for funding the projects, Khayum said the business model for hydrogen looks similar to the model for liquefied natural gas projects. “We have a wide degree of flexibility in how we can finance projects,” he said, noting the availability of project financing as well as the option to fund projects from TC Energy’s balance sheet.

“We have a number of financial advisors engaged to ensure that as we develop the projects from the offtake agreements to the supply chain agreements – and everywhere in between – those contracts are bankable to provide us the optionality to use project financing,” he said.

Khayum believes that the project finance market is still about 12 months away from being ready to finance hydrogen projects. “That’s because we are one of the early movers in hydrogen development and, as such, we’ll be bringing forward to the marketplace some of the first bankable offtake and supply chain contracts along with risk management tools and activities.”

He noted there was still work to be done among underwriters to validate those contracts for bankability. “We are working over the next year to not only get our projects to FID but working in tandem with our financial advisors to enable the banking system to accommodate those transactions.”

Much of the underwriting requirements have already been well-established in LNG, he noted. “If we can manage risk in a similar fashion,” he added, “we think it will be much more expeditious to achieving a positive FID.”

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Denver green ammonia firm prepping series C capital raise

A green ammonia developer and technology provider is laying the groundwork for a series C capital raise later this year, and still deliberating on a site for its first project.

Starfire Energy, a Denver-based green ammonia producer, is wrapping up a series B capital raise and laying the groundwork for a series C later this year, CEO Joe Beach said in an interview.

The company completed a $6.5m series A in 2021 and finished a $24m series B last year. Investors include Samsung Ventures, AP Ventures, Çalık Enerji, Chevron Technology Ventures, Fund for Sustainability and Energy, IHI Corporation, Mitsubishi Heavy Industries, Osaka Gas USA, Pavilion Capital and the Rockies Venture Club.

Beach declined to state a target figure for the upcoming raise. The firm has not used a financial advisor to date.

Starfire is currently deliberating on locations for its first production facility to come online in 2026, Beach said. Colorado is a primary contender due to ammonia demand, while the Great Plains offer abundant wind energy.

The firm’s strategy is to use renewable energy and surplus nuclear power from utilities to create ammonia from hydrogen with no storage component, eliminating the problems associated with hydrogen storage and transportation.

Targeted offtake industries include agriculture, maritime shipping and peaking power fuel consumption.

“The demand is global,” Beach said, stating that he expects about 150 leads to convert to MOUs. “We get inbound interest every week.”

For future capital raising, Beach said the company could take on purely financial investors, as it already has a long list of strategic investors.

“The expectation is we will wind up with manufacturing plants around the world,” Beach said.

The “new petroleum”

Many hydrogen production projects have been announced worldwide in the last year.

Beach said he expects many of those to transition into ammonia production projects, as ammonia is much easier to export.

Now, Starfire is working on developing its ammonia cracking technology, which converts ammonia into an ammonia/hydrogen blend at the point of use for chemical processes. The final product form in that process is 70% ammonia, 22.5% hydrogen and 7.5% nitrogen – all free of emissions.

The company is using proceeds of its series B capital raise to develop its Rapid Ramp and Prometheus Fire systems. Rapid Ramp uses a modular system design for the production of green ammonia using air, water, and renewable energy as the sole inputs. Prometheus Fire is an advanced cracking system that converts ammonia into hydrogen, operating at lower temperatures than other crackers and creating cost-effective ammonia-hydrogen blends that can replace natural gas.

The advantage to using this technology is that it makes the export of a hydrogen product financially feasible, Beach said.

“You should see ammonia becoming the new petroleum,” he said of the global industry. Ammonia can be deployed internationally like oil and provide the dependability of coal.

Eventually Starfire will undergo a financial exit, Beach said. Likely that will mean an acquisition, but an IPO is also on the table.

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Analysis: Premium for clean hydrogen unlikely

A group of hydrogen offtakers say they have every intention of decarbonizing their fuel intake, but barring the implementation of a carbon-pricing mechanism, paying a premium for it is unrealistic.

Passage of the Inflation Reduction Act ignited investor interest in the global market for clean hydrogen and derivatives like ammonia and methanol, but offtake demand would be better characterized as a flicker.

And while many questions about the nascent market for green hydrogen remain unanswered, one thing is clear: offtakers seem uninterested in paying a “green premium” for clean fuels.

That doesn’t mean offtakers aren’t interested in using clean fuels – quite the opposite. As many large industrial players worldwide consider decarbonization strategies, hydrogen and its derivatives must play a significant role.

Carbon pricing tools such as the Carbon Border Adjustment Mechanism in Europe could introduce a structural pricing premium for clean products. And industry participants have called for carbon levies to boost clean fuels, most recently Trafigura, which released a white paper today advocating for a carbon tax on fossil-based shipping fuels.

But the business case for clean fuels by itself presents an element of sales risk for potential offtakers, who would have to try to pass on higher costs to customers. Even so, there is an opportunity for offtakers to make additional sales and gain market share using decarbonization as a competitive advantage while seeking to share costs and risks along the value chain.

“It’s a very difficult sell internally to say we’re going to stop using natural gas and pay more for a different fuel,” said Jared Elvin, renewable energy lead at consumer goods company Kimberly-Clark. “That is a pickle.”

Needing clean fuels to reach net zero

Heavy-duty and long-haul transportation is viewed as a clear use case for clean fuels, but customers for those fuels are highly sensitive to price.

“We’re very demand focused, very customer focused,” said Ashish Bhakta, zero emission business development manager at Trillium, a company that owns the Love’s Travel Shop brand gas stations. “That leads us to be fuel-agnostic.”

Trillium is essentially an EPC for fueling stations with an O&M staff for maintenance, Bhakta said.

As many customers consider their own transitions to zero-emissions, they are thinking through EV as well as hydrogen, he said. Hydrogen is considered better for range, fueling speed and net-payload for mobility, all of which bodes well for the clean fuels industry.

One sticking point is price, he said. Shippers are highly sensitive to changes in fuel cost – and asking them to pay a premium doesn’t go far.

Alessandra Klockner, manager of decarbonization and energy solutions manager at Brazilian mining giant Vale, said her employer is seeking partnerships with manufacturers, particularly in steel, to decarbonize its component chain.

In May Vale and French direct reduced iron (DRI) producer GravitHy signed an MoU to jointly evaluate the construction of a DRI production plant using hydrogen as a feedstock in Fos-sur-Mer, France. The company also has steel decarbonization agreements in Saudi Arabia, the UAE and Oman.

In the near term, 60% of Vale’s carbon reductions will come from prioritizing natural gas, Klockner said. But to reach net zero, the company will need clean hydrogen.

“There’s not many options for this route, to reach net zero,” she said. “Clean hydrogen is pretty much the only solution that we see.”

Elvin, of Kimberly-Clark, noted that his company is developing its own three green hydrogen projects in the UK, meant to supply for local use at the source.

“We’re currently design-building our third hydrogen fueling facility for public transit,” he said. “We’re basically growing and learning and getting ready for this transition.”

The difficulty of a “green premium

The question of affordability persists in the clean fuels space.

“There are still significant cost barriers,” said Cihang Yuan, a senior program officer for the World Wildlife Fund, an NGO that has taken an active role in promoting clean fuels. “We need more demand-side support to really overcome that barrier and help users to switch to green hydrogen.”

Certain markets will have to act as incubators for the sector, and cross-collaboration from production to offtake can help bring prices down, according to Elvin. Upstream developers should try to collaborate early on with downstream users to “get the best bang for your buck” upstream, as has been happening thus far, he added.

Risk is prevalently implied in the space and must be shared equitably between developers, producers and offtakers, he said.

“We’ve all got to hold hands and move forward in this, because if one party is not willing to budge on any risk and not able to look at the mitigation options then they will fail,” he said. “We all have to share some sort of risk in these negotiations.”

The mining and steel industries have been discussing the concept of a green premium, Klockner said. Green premiums have actually been applied in some instances, but in very niche markets and small volumes.

“Who is going to absorb these extra costs?” she said. “Because we know that to decarbonize, we are going to have an extra cost.”

The final clients are not going to accept a green premium, she said. To overcome this, Vale plans to work alongside developers to move past the traditional buyer-and-seller model and into a co-investment strategy.

“We know those developers have a lot of challenges,” she said. “I think we need to exchange those challenges and build the business case together. That’s the only way that I see for us to overcome this cost issue.”

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